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UPDATE: Missouri's Boeing incentives could total $1.7 billion

Tuesday, December 3, 2013 | 8:22 p.m. CST; updated 8:34 p.m. CST, Tuesday, December 3, 2013

*This story has been updated with further details, including the Senate committee's approval of the proposal.

JEFFERSON CITY —  Missouri senators hoping to land production of a new Boeing airplane were set to begin debate Wednesday on a package of incentives valued at up to $1.7 billion over two decades.

The proposed incentives, which are dependent on the creation of thousands of new jobs, cleared their first test Tuesday evening by passing a Senate committee that heard testimony from a large contingent of St. Louis area officials backing the plan.

A more telling test will come when the legislation is debated by the full Senate, where some Republicans remain philosophically opposed to tailoring tax breaks for specific businesses and want to offset the Boeing incentives with reductions to other tax credits.

Missouri is one of more than a dozen states that received invitations from Boeing to bid on the production of the next-generation 777X commercial airplane after machinist union members in Washington state rejected a proposed contract that sought concessions on pensions and health care costs.

Missouri Gov. Jay Nixon called a special legislative session with the goal of submitting a proposal by a Dec. 10 deadline.

Boeing already employs about 15,000 people in Missouri and makes military aircraft in the St. Louis area. As detailed Tuesday by Nixon's administration, Missouri's incentives would grow based on the number of new jobs Boeing would bring to Missouri for the commercial airplane.

Nixon also announced an agreement among St. Louis area labor councils to supply workers around the clock — without incurring overtime pay — to speed up construction of a potential Boeing facility.

"Missouri brings a lot to the table when it comes to competing for this massive manufacturing project," Nixon told reporters Tuesday.

St. Louis officials said the potential Boeing facility could provide the biggest economic boost in a generation for the region, which has seen decades of declining population in its urban core.

"This means a great deal to the St. Louis area," said St. Louis County Executive Charlie Dooley, a former Boeing employee.

Dooley was joined at the Missouri Capitol by St. Louis Mayor Francis Slay, who said a Boeing expansion could also be a boon for its hundreds of suppliers in all corners of the state.

Under Missouri's proposal, Boeing's incentives would be tied to its payroll. If Boeing were to add 2,000 jobs in Missouri for its commercial passenger jet, the company could get an aggregate of up to $435 million of state incentives by 2040. A total of 8,000 jobs could result in as much as $1.74 billion of state incentives, according to one of several scenarios analyzed by the governor's office. The company also could receive a still unspecified amount of aid from local St. Louis area governments.

The analysis assumes the employees would be paid an average of $95,000 starting in 2018 with an annual pay raise of 3 percent.

All of the scenarios project that Missouri would reap more in new tax revenues than it would give away in incentives. The projections by Nixon's administration show a net financial benefit to the state of $264 million by 2040 if Boeing were to add 2,000 jobs. That rises to a net benefit of almost $1.1 billion for 8,000 jobs.

Though the plan has general support from legislative leaders, some Republican lawmakers remained skeptical Tuesday. Some opponents cited their general dislike of tax breaks targeted at specific companies while begrudging Nixon's veto of a broad-based income tax cut earlier this year for businesses and individuals.

Sens. John Lamping of St. Louis and Will Kraus of Lee's Summit both voted against the legislation in the committee while raising concerns about the accuracy of the revenue projections. Lamping and several other senators also have said that they want to offset Boeing's new incentives by reducing the tax credits available for other purposes.

Sen. Rob Schaaf, R-St. Joseph, said he wants to secure a commitment that the legislature will curtail tax credits benefiting developers of low-income housing and historic buildings when the annual regular session starts Jan. 8.

As a conservative, Schaaf said, the Boeing proposal is something he would "probably not support, but maybe not filibuster."

Although they have no vote in the matter, U.S. Sens. Claire McCaskill and Roy Blunt sent a letter Tuesday to Boeing praising their home state's workforce and transportation infrastructure.

"Without a doubt, Missouri is the right location to select," the senators wrote.


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